There is nothing worse in insurance than reporting a claim to your insurance carrier and finding out that it is excluded from coverage under the policy. Because of this, policy exclusions receive a lot of bad publicity, but in reality, they are very helpful in lowering premiums and making insurance practical for those wishing to purchase it. The primary purpose of exclusions is to clarify the coverages granted by the insurer by specifying what the insurer does not intend to cover. Most of the exclusions can be removed from the policy or coverage for them can also be added through endorsements. Here are six reasons for having exclusions on an insurance policy:

• 1. Eliminate coverage for uninsurable loss exposures
  Some loss exposures (such as intentional acts) possess few if any of the ideal characteristics of an insurable loss exposure. Exclusions allow insurers to preclude coverage for these loss exposures.
• 2. Assist in managing moral and morale hazards
  Moral hazards are defects or weaknesses in human character that lead some people to exaggerate losses or intentionally cause them to collect insurance proceeds. Morale hazards exist when the likelihood or severity of a loss is increased because a person is not as careful as the person should be in preventing losses from occurring. Some exclusions aim to minimize both of these types of hazards.
• 3. Reduce likelihood of coverage duplications
  In some cases, two insurance policies provide coverage for the same loss. Exclusions ensure that two policies work together to provide complimentary, not duplicate, coverage and that insureds are not paying duplicate premiums.
• 4. Eliminate coverages not needed by the typical insured
  Exclusions sometimes allow insurers to exclude coverage for loss exposures not faced by the typical insured. This means that all insureds would not have to share the costs of covering the loss exposures that relatively few insureds have. These exposures can be added to coverage under the policy for those few insureds by eliminating the exclusion.
• 5. Eliminate coverages requiring special treatment
  Exclusions eliminate the coverages that require substantially different insurer services from what is normally required.
• 6. Assist in keeping premiums reasonable
  Exclusions allow insurers to preclude insuring loss exposures that would otherwise increase costs. By keeping costs down, insurers can offer premiums that a sufficiently large number of insurance buyers consider reasonable.

Knowing the purpose and reasons for exclusions allows you to have a better approach to insurance and understanding of how it can benefit your business. Always check the exclusions in your insurance policies to make sure they do not eliminate coverage for exposures faced by your landscaping business. If you have any questions regarding your insurance coverage, please feel free to contact the agents at BearWise Landscapers.

The Agent Articles section of BearWiseLandscapers.com allows our insurance agents to provide practical information for landscapers. These agents can also obtain quotes and establish a custom insurance program for your landscaping business through our access to a variety of insurance carriers. This agent article is filed under (1) Insurance, and you can follow comments to it through the RSS 2.0 feed. Feel free to leave your own response below: